Insurers are struggling to retain policyholders as they move from homeowners to renters insurance, according to J.D. Power’s 2021 U.S. Home Insurance Study.
About half or 52% of Boomers and Pre-Boomers, those age 55 and older, who have moved from homeowners to renters stay with the same carrier. Overall annual homeowners retention rate is about 92%.
The study is based on responses from 11,828 homeowners and renters via online interviews conducted between May and June. The study examines overall customer satisfaction with insurance products by using several factors including interaction, policy offerings, price, billing process and policy information and claims.
Amica Mutual ranked first in the homeowners’ segment for overall customer satisfaction, followed by Automobile Club of Southern California and tied for third is Erie Insurance and State Farm. Lemonade ranked first in renters insurance and State Farm followed in second. The rankings are based on a 1,000 point scale.
Robert M. Lajdziak, senior consultant of insurance intelligence at J.D. Power said the study captured new data related to the move from homeowner to renter.
“Switching triggers are real and an important one for insurers is when a customer is moving homes,” Lajdziak said.
Of the 52% of the Boomers and Pre-Boomers who were retained, the responses indicate they like their carrier for the service experience, brand reputation and convenience and ease of doing business, Lajdziak added.
“Those that chose a new carrier were focused more on the price,” Lajdziak said. “That is why it is so critical that carriers find a way to get customers to engage. When they engage, the customer is able to kick the tires on the service experience. If they don’t, well then it just comes back to price, there is no other input for the customer to make a decision.”
Other findings include the following:
- Bundling builds loyalty but legacy systems cause visibility limits. Policyholders who bundle insurance products with a renters policy are two times as likely to stay loyal to the same carrier.
- Trust is important to retention. Homeowners who believe their carrier is trustworthy are four times more likely to respond, ‘definitely will,’ to renewal questions.
- Fifty-nine percent of homeowners with smart home products responded that the product has helped prevent or lessen property damage. Only 6% of respondents said they installed smart tech to save money on the cost of insurance but 46% said it was to keep the home safe and prevent or minimize damage.
“Smart home tech is really catching on,” Lajdziak said. “This the beginning of an entirely new insurance value proposition. Can a carrier help customers with devices that prevent damage prior to a loss versus just being the protection in the event of a loss? The customer says they would rather prevent the loss than have really good insurance to replace their home and property.”